A Roundup of Crude Oil Predictions and Targets

Remember when the producers of Diff’rent Strokes decided that Arnold wasn’t cute enough anymore so they brought on the quintessential red-headed stepchild, Sam, to ratchet up the adorable factor?  Gary Coleman probably felt a lot like Crude Oil feels now that Gold has replaced it as the commodity speculators’ darling.

Anyway, let’s take a look at some projections and commentary on the near term outlook for crude:

Credit Suisse (moderately bullish)

“This is the first stage of the new cycle as the demand recovery on a global scale is underway,” said Tobias Merath, head of commodities research at Credit Suisse Group AG in Zurich. “What’s capping any break to the upside is the huge over-hang of distillates in the U.S. and low refinery margins.”

B of A/ Merrill Lynch (turning bullish)

Bank of America-Merrill Lynch raised its 2010 U.S. crude oil CLc1 price forecast on Friday to $85 a barrel, from its previous estimate of $75…its revision follows a stronger than expected rebound in world economic recovery, which led it to also revise up its GDP and oil demand forecasts.

Morgan Stanley (longer-term bullish)

Morgan Stanley has raised its forecast of U.S. crude oil price to $105 a barrel in 2012 from $95 due to tightening spare capacity.  “Assuming that demand returns to growth, we see global spare capacity back to 2007/08 levels by 2012, and getting even tighter thereafter…We believe that prices will need to move higher to ration demand as the world struggles to find enough supply.”

Goldman Sachs (bullish short and long-term)

U.S. investment bank Goldman Sachs expects oil prices to rise to an average $90 a barrel next year, before increasing to $110 in 2011, as strong growth in emerging market economies boosts crude demand.

Deutsche Bank (bearish)

While many experts predict higher oil prices, Deutsche Bank analysts say they could fall to $60 a barrel next year, as the sluggish economy dampens demand.  That would represent a drop of more than 20 percent from recent levels…the analysts predict an average price of $65 in 2010.

Mexico (nervous and hedging)

Mexico has hedged much of its 2010 net oil exports at $57 a barrel, the government said on Tuesday, continuing the conservative strategy that reaped huge profits in 2009 after the credit crisis crushed oil prices.   Mexico paid $1.172 billion for options that guarantee a minimum price of $57 a barrel for 230 million barrels of oil exports next year.

Sources:

BofA-Merrill Lynch ups 2010 US oil forecast to $85  (Reuters)

Deutsche Bank: Oil Could Drop to $60  (Money News)

Morgan Stanley ups oil price f’cast to $105 in 2012  (Alibaba)

Goldman sees 2010 oil price at $90, higher in 2011  (Reuters)

Oil Advances as Dollar Falls, Report Shows Drop in Stockpiles  (Bloomberg)

Mexico hedges bulk of 2010 oil exports at $57/bbl  (Reuters)